Firm utilizes strategy of capital rationing

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Reference no: EM131924231

1. A firm utilizes a strategy of capital rationing, which is currently $375,000 and is considering the following two projects: Project A has a cost of $335,000 and the following cash flows: year 1 $140,000; year 2 $150,000; and year 3 $100,000. Project B has a cost of $365,000 and the following cash flows: year 1 $220,000; year 2 $110,000; and year 3 $150,000. Using a 6% cost of capital, what is the internal rate of return of project B?

Exactly 6%

Lower than 6%

Higher than 6%

Can not be determined from the given information

2. Show the amortization schedule of a note of $50,000 with 10 years, 3.5% term with quarterly payment that was signed on January 1, 2017.

Reference no: EM131924231

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